An austerity lesson from Europe?

There aren’t direct parallels between the European austerity measures and what’s being proposed for the United States, but there are connections.

On the continent, the slashed government budgets in the wake of the global meltdown have proved hugely unpopular — the French and Greek votes over the weekend are widely interpreted as rejections of the strategy of cinching debt to lower interest rates and lay the foundation for stronger economies. And those plans haven’t worked, at least so far: The cuts have choked off economic growth, trapping entire nations in a vicious downturn that looks increasingly difficult to escape.

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Austerity has even become politically toxic in relatively healthy economies. Unemployment in Germany is 7 percent — the lowest rate in 20 years — but the coalition led by German Chancellor Angela Merkel, a leading proponent of austerity, lost its majority in one of the country’s northern states after a vote Sunday.

Britain slumped into recession at the start of this year. Unemployment in Spain climbed to an astronomic 24.4 percent while the interest rate on its bonds has jumped nearly 1 percentage point since March to just under 6 percent. Greece — after a 20 percent reduction in its minimum wage, among other policy changes — is embroiled in chaos.

The debate in the United States is over which lessons to draw from European austerity.

Democratic economists like Robert Reich, the former labor secretary, say the United States will suffer through an economic reversal similar to Europe’s because of automatic spending reductions and expiring tax cuts at the start of next year.

With interest rates at about 1.9 percent for a 10-year Treasury bond, they argue, it’s still historically affordable to borrow money that can be used to keep stimulating what has been a weak recovery. Deficits should be lowered only when the economy is again booming.

House Budget Committee Chairman Paul Ryan (R-Wis.) counters that the government needs to start limiting its deficits to avoid Europe’s predicament, saying there is an eventual price to be paid for racking up continued yearly shortfalls of more than $1 trillion. Bond traders could easily turn on America the more unsustainable the debt becomes, causing the low interest rates to rise dangerously.

“Everybody wants to think that we’re selling austerity and pain — quite the opposite,” Ryan told Forbes in a video interview last month. “If you keep running up the tab, borrowing way beyond our means and having these massive tax increases, which will shut down economic growth in this country, then you fall into the European austerity mode where you have no choice but to please the bond markets.”